Published: July 23, 1997

Mr. Yeltsin's was a difficult choice between conscience and expedience, and the decision is bound to have painful political repercussions for him. The law was passed overwhelmingly by both houses of Parliament in an effort to protect the Russian Orthodox Church from competition from other religions.

Human rights organizations, Pope John Paul II, the United States Congress and the State Department denounced the measure as infringing on the rights of minority religions.

That criticism from the West shifted the debate in Russia from a dispute about religious tolerance to a heated controversy about nationalism and Russian sovereignty.

As written, the law would have severely limited the activities of any religion that was not registered by the Soviet state 15 years ago, when society was officially atheist and religious activists were persecuted.

The law cited the Russian Orthodox Church, Judaism, Buddhism and Islam as traditional religions. All other faiths, including Roman Catholicism and the Baptist movement, could have fallen into the category of foreign, and unwelcome, denominations and been stripped of their property and rights to proselytize.

Mr. Yeltsin, who had vetoed milder versions of the bill in the past, has made his personal commitment to religious freedom clear. But the passions aroused by the bill -- and the opposition to it abroad -- made his decision far more problematic.

The battle is not over. If Parliament overrides Mr. Yeltsin's veto by a two-thirds majority, Mr. Yeltsin will be obliged to sign the bill. In many regions of Russia, moreover, local legislatures have already passed their own laws restricting the activities of minority religions.

While Parliament routinely opposes Mr. Yeltsin on major initiatives, it is rare for the Patriarch of the Russian Orthodox Church to speak out on so contentious an issue. Last Sunday, the Patriarch, Aleksy II, likened the ''eastward expansion of foreign sects and missionaries in Russia'' to the expansion of NATO.

The bill was drafted to help the Russian Orthodox Church combat the encroachment of foreign religions like Evangelical Christian groups, Scientology and, most particularly, cults like Aum Shinrikyo of Japan, which attracted thousands of followers in Russia.

But even favored religions fear that the law would effectively restore the Russian Orthodox Church, with its 60 million believers, to the position as the state religion of Russia that it enjoyed before 1917.

Mr. Yeltsin, who is on vacation on the Volga River, coated his veto with conciliatory language. In a statement issued by his Kremlin office tonight, the President said, ''There is no doubt that the law is necessary. It must protect moral and spiritual health of Russians and prevent the penetration of radical sects inflicting serious damage to the health and psyche of our citizens.''

Mr. Yeltsin stated, ''But signing the law in its present form would have led to religious conflicts inside the country.'' He added, ''There can be no democratic society where the Constitution is not observed, where the interests of any minority are not protected.''

The United States Senate passed an amendment to a foreign aid bill last week to cut off all aid to Russia if Mr. Yeltsin signed the bill into law. Even Russians who opposed the bill expressed deep anger over what they see as American meddling in Russian domestic policy.

Mr. Yeltsin's critics are already accusing him of capitulating to the West. ''The only reason he didn't sign it was because of foreign influence,'' said Pavel Chinilin, a director of the department of religious instruction of the Russian Orthodox Church. ''There is full consensus in Russian society about this.''

Not all Russians agree, obviously. Yuri Rosenbaum, a law professor who drafted the 1990 law on human rights and religious freedom that is still in practice, said the bill ''is an attempt to return state control over the religious life in the country.''

Human rights and freedom of the press have not fully weathered Russia's stormy shift to democracy, but the collapse of Communism did introduce real religious freedom to Russia. That tolerance has gradually been eroded by the rise of nationalism and by the spread of cults. -------------------- Washington Praises Yeltsin

WASHINGTON, July 22 (By The New York Times) -- President Clinton's national security adviser, Samuel R. Berger, praised President Yeltsin today for making the difficult decision to veto the religion bill.

''There was a lot of pressure on this one, and it is an act of courage,'' Mr. Berger said in a brief interview. ''Yeltsin's done the right thing for freedom of religion in Russia. It reflects the fact that Yeltsin's concept of democracy embraces freedom of religion, and that should be reassuring to other democracies.''

Other Administration officials, who spoke on condition that they not be identified, expressed relief. Some in Congress viewed Mr. Yeltsin's decision as a definitive moment for Russia's moral standing, let alone its future as a secular and liberal state.